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Monday, September 15, 2014

When I started this
blog in Sept 2010, I had one target audience – my MBA students.

Slowly the target
audience changed to my current students and my ex-students.

Then came the book
and the target audience changed to my ex-students and my readers.

Now there are
hundreds of people who read this blog daily – and they are from all parts of
the globe.

The blog now now
has a lot of investing ideas. And with this increase in content, I am seeing issues of scalability.

Quite a few people have
told me that this blog is difficult to navigate and good ideas are
lost to the first time visitor. Plus it does not have the look
and feel. It is too bland – no colour, no visuals.

Keeping this
feedback in mind – we are moving on to newer website - here is the link - http://get-rich-and-retire-early.com/Our effort has been
to better organise the investing ideas so that you can navigate with ease.

For all those who
have registered in my blog, you do not have to register again. And if you have
not registered, then please do register – that way you will not miss any ideas.

Please spend time
browsing around -may be you will discover investing ideas that you missed.

I would appreciate your feedback and suggestions for
further improvement.

Monday, September 8, 2014

This is a question that comes up in each of my wealth advisory
sessions. Lately, with the stock markets going up, I see this coming up a lot
more often than before.

In the past 12 months the BSE Sensex has gone up by 36%.
Every week it is scaling new highs and even though every investor is happy
seeing his portfolio go up – he/she also knows that it is only paper
money, till the stock is sold and the money comes into your bank account.

So the question is - should I sell my stocks?

As per me – there are only three reasons for exiting an investment. They are:

You need the money for
an expense - for example you need money for a planned car upgrade or
an unplanned hospitalisation.You
have investments giving you great returns – but what to do – you need to
sell them and use the money for these expenses.

Your investment is
not expected to do well in the future – You invested few years back and the investment was giving you the planned 20% per annum. But now situation has changed and your believe that in the next 2-3 years, this investment will not give you 20%. A good example is Gold - Gold gave great
returns in the period 2008 to 2011 – each year it gave more than 20% per
annum. However in 2012, it gave just about 11% returns and in 2013 it gave
negative returns ( -14%). And this year too it is not doing well. If your
forecast is that Gold will continue to do badly in the future, then it is
best to exit gold (if you have not exited it already).

When you get an even
better investment option:You
have invested in Asian paints and it is giving you a steady return of 25% per
annum and you are happy with it. And then you get a chance to invest in a real estate scheme
where the returns are expected to be more than 25%. Then you must exit the investment in Asian paints and move your funds to the real estate scheme. Remember that the real estate scheme may or may not actually give the returns - but at this point of time, you are confident of your forecast.

These are the only three scenarios when you must exit an
investment.

Now coming back to the current question – should I sell my
stocks at the current levels?

Well it depends on your view on where the markets will go in
the next 2-3 years.

If you believe that it will not go much higher than the
current levels, then you are essentially looking at scenario 2 listed above. In that case, you can exit.

If you believe that the stock markets will go still higher
and this is just the start of a multiyear bull run – then you must stay
invested and watch your investments go up and up.

Where do I stand?

I believe that we are getting into a multiyear bull run – expectation
of good governance, easy flow of money from Europe and Japan, India’s growing
domestic consumption story and increasing exports to US markets are the reasons
why I am optimistic.

My current stock portfolio is giving me a 75% return over the past 12 months -here is a screen shot.

But despite this good performance, I am not selling my stocks. They are hand picked over time and are giving good returns. So why sell?

However, I have sold one stock this week - I have exited Jubilant Foodworks – my non performing
stock for past 2 years and I will figure out where to invest in this week - likely to invest it in HDFC Mid cap opportunities
fund where I believe there will be good returns over the next 2-3 years.